Greetings and Welcome to the RealD, Inc. second quarter fiscal year 2013 results conference call. (Operator Instructions) A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erik Randerson, Vice President of Investor Relations at RealD. Thank you, Mr. Randerson. You may begin.

Erik Randerson

Thank you and welcome to RealD’s conference call to discuss our financial results for the second quarter ended September 21, 2012. By now everyone should have access to the earnings press release which was distributed today approximately 4:00 P.M. Eastern time. It is available on the Investor Relations portion of RealD’s website at www.RealD.com. Also available on the website is a financial highlights presentation that provides a detailed review of our results for the second quarter and year-to-date periods. This call is being webcast and will be available for replay.

In our remarks today we will include statements that considered forward-looking within the meaning of the United States’ Securities Laws. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current knowledge and expectations as of October 29, 2012, and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements.

A detailed discussion of these risks and uncertainties is contained in our annual report on Form 10-K and quarterly reports on Form 10-Q. The company undertakes no obligation to update any forward-looking statements.

We’ll refer to non-GAAP measures that when used in combination with GAAP measures provide us with additional analytical tools to understand our operations. In our earnings press release and in our SEC filings we have provided reconciliations of these non-GAAP measures to their most comparable GAAP measures and with that I’d like to hand the call over to our Chairman and CEO, Michael Lewis.

Michael Lewis

Thanks, Erik. As discussed on last quarter’s investor call, the record box office performance from last summer resulted in a very difficult comparison for RealD in our second fiscal quarter. The comparison was further impacted by the global appeal of the Olympic Games, the most watched television event in U.S. history.

Ice Age and Spiderman did great business in 3D in the quarter, particularly overseas, combining for approximately $1.6 billion in total box office globally. Yet these films could not match the exceptional box office generated by Harry Potter, Transformers and The Smurfs, which combined for a remarkable $3 billion in global box office last year. Without a doubt, studios adjusted the timing of their major film releases to avoid competing directly with the Olympic Games and rightly so because many of the films released during the Olympics performed poorly at the box office.

With that context, let me briefly cover the highlights of our second quarter 2013 financial results and then I will discuss some industry trends and our key growth initiatives. License revenue for the quarter declined 33% year-over-year, generally consistent with the year-over-year decline in estimated RealD box office announced earlier this month. The decline in license revenue contributed to a GAAP net loss attributable to common shares of $0.08 per share compared to GAAP net income of $0.33 per diluted share in the second quarter a year ago. Adjusted EBITDA was $13.8 million, a decline of 69% versus $44.4 million a year ago.

Importantly, during the quarter we generated $17.6 million in free cash flow and we generated $37.7 million in free cash flow during the first six months of fiscal 2013. As expected our free cash flows are benefiting from a more moderate level of capital expenditures in recent quarters.

Now let’s talk about the film slate. Frankly, the modest growth in 3D films we had anticipated during fiscal 2013 hasn’t materialized as studios have rescheduled the release dates for a number of films that we had originally expected to occur in fiscal 2013. For example, within the past three months release dates for The Great Gatsby, 47 Ronin, and Battle of the Year:The Dream Team were moved out of our fiscal 2013 and into our fiscal 2014. Importantly looking at the pipeline of content beyond the current fiscal year we’re confident the number of 3D films will achieve solid growth in fiscal 2014 compared to the 35 films currently on the slate for fiscal 2013.

The developing slate of 3D content for fiscal 2014 looks really promising. I am confident because today RealD has better visibility into future 3D films than ever before. The expanded team we created within RealD to focus on the industry’s creation of additional 3D content has helped us gain insight regarding the developing 3D slate at the earliest stages.

With that in mind let’s review a few of the major films that are already announced on our fiscal 2014 film slate. They include The Hobbit Part 2, Iron Man 3, Monsters University, Despicable Me 2, Star Trek, Turbo, Smurfs 2, Cloudy with a Chance of Meatballs 2, Pacific Rim and Thor 2. So the film slate already looks strong and certainly we believe there are more announcements to come.

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